- Amazon's third-quarter earnings results are set to be released after the closing bell Thursday.
- The report is expected to be a telling sign for investors as to how expensive the company's new push into one-day shipping will really be.
- The e-commerce giant's cloud business will also be a point of interest as it continues to battle for market share with Alphabet-owned Google and Microsoft.
- Here's what Wall Street analysts are saying leading up to Amazon's results.
- Watch Amazon trade live on Markets Insider.
When Amazon reports third-quarter earnings after the closing bell Thursday, the retail giant is expected to provide updates on its aggressive push into next-day delivery.
In April, the company said it planned to spend $800 million to shave a day off its Prime two-day shipping guarantee.
In the past, analysts have estimated the initiative could add billions to Amazon's revenue. But it's still unclear whether the company will be able to expand the program while controlling costs.
Amazon has rarely ever been afraid to sacrifice profits for growth, and analysts expect investors are eager to see how deep the company's expansion into one-day shipping cuts into margins.
Wall Street is expecting Amazon to report about $3.93 billion in profit on $68.7 billion in sales for the quarter. During the same period last year, Amazon generated $2.88 billion in profit and $56.58 billion in revenue.
Here's what analysts are saying about Amazon's one-day shipping and the state of its cloud business ahead of its third-quarter results:
Macquarie: "We do worry that investors are underestimating 4Q one-day shipping costs."
Price target: $2,200
"While AMZN is our favorite LT large cap name, we do worry that investors are underestimating 4Q one-day shipping costs," Macquarie analysts wrote in a note to clients on Wednesday.
The analysts added: "With mgmt. guiding for over $800mm in costs related to one-day shipping in 2Q, we think that 4Q guidance could incorporate a much larger number that could increase costs more than expected."
Goldman Sachs: "We expect investors will continue to place a premium on quality growth."
Price target: $2,350
"Given the high returns Amazon generates off of its incremental capital investments we expect investors will continue to place a premium on quality growth, driving further stock price outperformance," Heath Terry, an analyst at Goldman, said in a note to clients on October 15.
He added: "Amid record retail store closures, investments in faster delivery, AWS infrastructure and service expansion, and recovering momentum in the advertising business point to the potential for further growth acceleration and upside to consensus revenue expectations in Q3 and beyond."
Wedbush: "We think that the company is approaching a plateau for spending on certain categories."
Price target: $2,350
"While we think it is likely that operating expenses will continue to grow, we think that the company is approaching a plateau for spending on certain categories," Wedbush analyst Michael Pachter wrote in a note to clients on October 18.
Pachter continued: "We expect spending growth in future years to be driven by video content and ongoing initiatives to speed up delivery for Prime members."
Bank of America: "We see benefits to the AMZN ecosystem from investment in increasing internal delivery capabilities."
Price target: $2,250
"While 4Q profit guidance may be a short-term risk given added delivery costs (One-Day ramp, competition), we see benefits to the AMZN ecosystem from investment in increasing internal delivery capabilities, and think AMZN stock could benefit as y/y revenue accelerates," Bank of America Merrill Lynch analysts wrote in a note to clients on Monday.